EXECUTIVE AGREEMENT
THIS AGREEMENT is made as of this 3rd day of December, 2004, among
NATIONAL PENN BANCSHARES, INC., a Pennsylvania business corporation having its
principal place of business in Boyertown, Pennsylvania ("NPB"), NATIONAL PENN
BANK, a national banking association having its principal place of business in
Boyertown, Pennsylvania ("Bank"), and XXXXXXXX X. XXXXXXXXX, an individual
residing at 000 Xxx Xxxxxx, Xxxxxxxxxxxxx, Xxxxxxxxxxxx ("Executive").
W I T N E S S E T H :
WHEREAS, Executive is employed by NPB and Bank as Senior Vice
President, Chief Accounting and Investor Relations Officer; and
WHEREAS, the Boards of Directors of NPB and Bank deem it advisable to
provide Executive with certain additional benefits in the event of certain
changes in control of NPB or Bank so that Executive will continue to attend to
the business of NPB and Bank without distraction in the face of the potentially
disturbing circumstances arising therefrom.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein, and each intending to be legally bound, NPB, Bank and
Executive agree as follows:
1. Definitions. The following terms have the meanings specified below:
a. "Affiliate" means any corporation which is included within a
"controlled group of corporations" including NPB, as determined
under Code Section 1563.
b. "Base Salary" means the Executive's annual base salary,
established either by contract or by the Employer, prior to any
reduction of such salary pursuant to any contribution to a
tax-qualified plan under Section 401(k) of the Code.
c. "Cause" means the occurrence of either of the following, the
result of which is the termination of Executive's Employment:
i. Executive's conviction of, or plea of guilty or nolo
contendere to, a felony or a crime of falsehood or involving
moral turpitude; or
ii. the willful failure by Executive to substantially perform
his duties to Employer, other than a failure resulting from
Executive's incapacity as a
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result of the Executive's disability, which willful failure
results in demonstrable material injury and damage to
Employer.
Notwithstanding the foregoing, Executive's Employment shall
not be deemed to have been terminated for Cause if such termination
took place as a result of:
x. questionable judgment on the part of Executive;
y. any act or omission believed by Executive in good faith, to have
been in or not opposed to the best interests of the Employer; or
z. any act or omission in respect of which a determination could
properly be made that Executive met the applicable standard of
conduct prescribed for indemnification or reimbursement or
payment of expenses under the By-laws of NPB or the laws of the
Commonwealth of Pennsylvania, or the directors and officers'
liability insurance of NPB or any Employer, in each case as in
effect at the time of such act or omission.
d. "Change in Control" means:
i. An acquisition by any "person" or "group" (as those terms
are defined or used in Section 13(d) of the Exchange Act) of
"beneficial ownership" (within the meaning of Rule 13d-3
under the Exchange Act) of securities of NPB representing
24.99% or more of the combined voting power of NPB's
securities then outstanding;
ii. A merger, consolidation or other reorganization of Bank,
except where the resulting entity is controlled, directly or
indirectly, by NPB;
iii. A merger, consolidation or other reorganization of NPB,
except where shareholders of NPB immediately prior to
consummation of any such transaction continue to hold at
least a majority of the voting power of the outstanding
voting securities of the legal entity resulting from or
existing after any transaction and a majority of the members
of the Board of Directors of the legal entity resulting from
or existing after any such transaction are former members of
NPB's Board of Directors;
iv. A sale, exchange, transfer or other disposition of
substantially all of the assets of the Employer to another
entity, except to an entity controlled, directly or
indirectly, by NPB;
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v. A sale, exchange, transfer or other disposition of
substantially all of the assets of NPB to another entity, or
a corporate division involving NPB; or
vi. A contested proxy solicitation of the shareholders of NPB
that results in the contesting party obtaining the ability
to cast 25% or more of the votes entitled to be cast in an
election of directors of NPB.
e. "Code" means the Internal Revenue Code of 1986, as amended, and
as the same may be amended from time to time.
f. "Employer" means Bank, NPB or any Affiliate which employs
Executive at any particular time.
g. "Employment" means Executive's employment by Bank, NPB or any
Affiliate at any particular time in the capacity described in the
first WHEREAS clause of this Agreement, or in such other
comparable or higher ranking executive officer position.
h. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2. Resignation of Executive. If a Change in Control shall occur and if within
one hundred eighty (180) days after the effective date of a Change in
Control (or thirty (30) days after the completion of the conversion of the
computer systems if such conversion is later than one hundred eighty (180)
days after the effective date of a Change in Control, in either event, the
"Transition Period") there shall be:
a. Any involuntary termination of Executive's Employment (other than
for Cause);
b. Any reduction in Executive's title, responsibilities or
authority, including such title, responsibilities or authority as
such may be increased from time to time;
c. Any reduction in Executive's Base Salary in effect immediately
prior to a Change in Control, or any failure to provide Executive
with benefits at least as favorable as those enjoyed by Executive
under any of the pension, life insurance, medical, health and
accident, disability or other employee plans of NPB or an
Affiliate in which Executive participated immediately prior to a
Change in Control, or the taking of any action that would
materially reduce any of such compensation or benefits in effect
at the time of the Change in Control, unless such reduction
relates to a reduction applicable to all employees generally;
d. Any reassignment of Executive beyond a thirty (30) mile commute
by automobile from Boyertown, Pennsylvania; or
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e. Any requirement that Executive travel in performance of his
duties on behalf of NPB or an Affiliate for a greater period of
time during any year than was required of Executive during the
year preceding the year in which the Change in Control occurred
(each of the foregoing, a "Triggering Event");
then, at the option of Executive, exercisable by Executive within one hundred
eighty (180) days of the occurrence of any Triggering Event within the
Transition Period, Executive may resign from Employment (or, if involuntarily
terminated, give notice of intention to collect benefits hereunder) by
delivering a notice in writing to NPB, in which case Executive shall be entitled
to a lump sum cash severance payment equal to 100% of Executive's Base Salary in
effect immediately prior to a Change in Control, which Employer shall pay to
Executive within fifteen (15) days of Executive's termination of Employment.
Executive shall not be required to mitigate the amount of any payment
provided for in the preceding paragraph by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in the
preceding paragraph be reduced by any compensation earned by Executive as the
result of employment by another employer or by reason of Executive's receipt of
or right to receive any retirement or other benefits after the date of
termination of Employment or otherwise, except as otherwise provided therein.
3. Out-Placement Services. If a Change in Control occurs and Executive
exercises the option to resign from Employment (or is involuntarily
terminated) as described in Section 2, Employer shall provide Executive
with the services of a professional out-placement firm, if Executive so
requests, for the period not to exceed one year from the date of
Executive's resignation (or termination), at Employer's sole cost and
expense, up to a maximum amount of Seven Thousand Five Hundred Dollars
($7,500).
4. No Implied Rights; Rights on Termination of Employment.
a. No Right to Continued Employment. Nothing in this Agreement shall
confer upon Executive any right with respect to continuance of
Employment by Employer, nor shall it interfere with or limit in any
way the right of Employer to terminate Executive's Employment at any
time.
b. Voluntary Termination of Employment. If Executive voluntarily
terminates Executive's Employment (as defined in Section 1(g)) with
Employer at any time prior to a Change in Control, this Agreement
shall terminate at that time and Employer shall have no further
liability hereunder.
c. Termination--Cause. If Employer terminates Executive's Employment at
any time for Cause, this Agreement shall terminate at that time and
Employer shall have no further liability hereunder.
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d. Termination--Without Cause. Employer may terminate Executive's
Employment at any time without Cause. If Employer terminates
Executive's Employment at any time without Cause prior to a Change in
Control, and if no event has been publicly announced that with the
passing of time would constitute a Change in Control, this Agreement
shall terminate at that time and Employer shall have no further
liability hereunder. If Employer terminates Executive's Employment at
any time prior to a Change in Control but subsequent to the occurrence
of an event that has been publicly announced that with the passing of
time would constitute a Change in Control, the provisions of Sections
2 and 3 of this Agreement shall apply to same extent as if Executive's
Employment had been involuntarily terminated subsequent to a Change in
Control.
5. Arbitration. Any dispute or controversy arising out of or relating to this
Agreement and any controversy as to a termination for Cause shall be
settled exclusively by arbitration, conducted before a panel of three
arbitrators, in Reading, Pennsylvania, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on
the arbitrators' award in any court having jurisdiction.
6. Exclusive Benefit. Executive shall have no right to commute, sell, assign,
transfer or otherwise convey the right to receive any payments hereunder,
which payment and the right thereto are expressly declared to be
non-assignable and non-transferrable. In the event of any attempted
assignment or transfer, this Agreement shall terminate at that time and
Employer shall have no further liability hereunder.
7. Notices. Any notice required or permitted to be given under this Agreement
shall be properly given if in writing and if mailed by registered or
certified mail, postage prepaid with return receipt requested, to
Executive's residence in the case of any notice to Executive, or to the
attention of the President at the principal office of Bank, in the case of
any notice to the Employer.
8. Entire Agreement. This Agreement contains the entire agreement relating to
the subject matter hereof and may not be modified, amended or changed
orally but only by an agreement in writing, consented to in writing by NPB,
and signed by the party against whom enforcement of any modification,
amendment or change is sought.
9. Benefits.
a. This Agreement shall be binding upon and inure to the benefit of NPB
and Bank and their respective successors and assigns. Each of NPB and
Bank shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially
all of the business and/or assets of NPB or Bank to expressly assume
and agree to perform this Agreement in the same manner and to the same
extent that NPB or Bank would be required to perform it if no such
succession had taken place. Failure to obtain
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such assumption and agreement prior to the effectiveness of any such
succession shall constitute a breach of this Agreement and the
provisions of Sections 2 and 3 of this Agreement shall apply. As used
in this Agreement, "NPB" or "Bank" shall mean NPB or Bank as defined
previously and any successor to the business and/or assets of NPB or
Bank as aforesaid which assumes and agrees to perform this Agreement
by operation of law or otherwise.
b. This Agreement shall be binding upon and inure to the benefit of and
be enforceable by Executive's personal or legal representatives,
executors, administrators, heirs, distributees, devisees and legatees.
10. Applicable Law. This Agreement shall be governed by and construed in
accordance with the domestic internal law (but not the law of conflicts of
law) of the Commonwealth of Pennsylvania.
11. Headings. The headings of the sections and subsections hereof are for
convenience only and shall not control or affect the meaning or
construction or limit the scope or intent of any of the sections or
subsections of this Agreement.
IN WITNESS WHEREOF, NPB and Bank have each duly caused this Agreement
to be executed on its behalf by its duly authorized officers, and Executive has
hereunto set his hand and seal, as of the day and year first above written.
NATIONAL PENN BANCSHARES, INC. NATIONAL PENN BANK
By: /s/Xxxxx X. Xxxxx By /s/Xxxxx X. Xxxxx
----------------------- -----------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: President Title: President & CEO
Attest: /s/Xxxxxx X. Xxxxx Attest: /s/Xxxxxx X. Xxxxx
------------------------------ ----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: Group EVP Title: Group EVP
Witness:
_____________________________ /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------
XXXXXXXX X. XXXXXXXXX
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